EQUITY FUTURES EARLY RALLY FIZZLES OUT AS EARNINGS FROM KRAFT and DISNEY, CONCERNS ABOUT BANK OF AMERICA FUTURE TURN GAINS TO LOSSES
U.S. equity futures fell after an early rally driven by better than expected reports which stated that the housing and employment picture was not as bleak as many analysts were setting up to forecast. Stocks turned negative after digestion of the data allowed for sentiment to reset that the data still presented a domestic economy and employment picture that is still under tremendous pressure. Equities came under negative pressure, which pulled them back from holding above key resistance levels. Downward pressure was driven primarily by lower than expected earnings from consumer staples firms Kraft, Costco, and Archer Daniels Midland. These stocks, which had been havens from much of the volatility storm due to their perceived ability to make money through diversification and necessity purchases, came under pressure from falling sales volumes and negative outlooks for the rest of 2009.
Bank of America hit a new low for the decade, pulling the rest of the financial complex down with it on concerns that the institution may emerge from the financial crisis as little more than a nationalized, walk up branch of the Treasury. The fall in the financial sector proved once again that the broad based indices cannot sustain positive momentum without support from the financial sector. NASDAQ futures managed to post positive gains for the third session this week. However Cisco Systems earnings report released after the market closed showed that their 3rd quarter sales forecast missed estimates, driving NASDAQ futures down over 20 points. Likely Treasuries, the markets will likely trade in tight ranges tomorrow ahead of the Nonfarm payroll and unemployment figures for January. Expectations are for a loss of 524k jobs and unemployment levels to rise to 7.5%.
Technically, March Dow futures failed for a second time to hold above key resistance of 8060. Look for support to set up at 7820, with resistance pulling back slightly to the 8030 level, with next level of resistance at 8210.
EQUITY RANGES
OPEN
HIGH
LOW
CLOSE
CHANGE
DJH9 (MARCH DOW)
8025
8120
7885
7925
-61
SPH9 (MARCH S&P)
838.00
849.50
826.20
829.80
-1.70
NDH9 (MAR NASDAQ)
1213.50
1243.00
1208.00
1214.00
+6.25
Rich Roscelli and Paul Brittain
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